Title: Corporate social responsibility and ASC 820 hierarchy: evidence from responsible CSR activities

Authors: Patty Bick; Wen-Chyuan Chiang; Sharon (Xuerong) Huang; Li Sun

Addresses: Department of Finance, Collins College of Business, University of Tulsa, Helmerich Hall 118, 800 South Tucker Drive, Tulsa, OK 74104, USA ' Department of Operations Management, Collins College of Business, University of Tulsa, Helmerich Hall 118, 800 South Tucker Drive, Tulsa, OK 74104, USA ' Department of Accounting, Miller College of Business, Ball State University, Whitinger Business Building, Room 100, Muncie, IN 47306, USA ' Department of Accounting, Collins College of Business, University of Tulsa, Helmerich Hall 313, 800 South Tucker Drive, Tulsa, OK 74104, USA

Abstract: In 2006, Financial Accounting Standards Board (FASB, 2006) issued Accounting Standards Codification No. 820 (ASC 820) requiring firms to prioritise the inputs used in fair value assessment by levels: from the most reliable (Level 1) to the least reliable (Level 3) inputs. This paper studies the relationship between responsible corporate social responsibility (CSR) activities and the fair value hierarchy under ASC 820. Consistent with the stakeholder theory, we find a positive (negative) relationship between responsible CSR activities and Levels 1 and 2 (Level 3) fair values, suggesting that firms with high levels of responsible CSR activities use more Levels 1 and 2 fair values and less Level 3 fair values. Additionally, we find that more able managers use more Level 3 fair values. However, more able managers in firms with higher levels of CSR activities reduce the use of Level 3 fair values. Overall, our results support the stakeholder theory of CSR.

Keywords: CSR; corporate social responsibility; ASC 820; Accounting Standards Codification; fair values; fair value hierarchy; USA; United States; stakeholder theory.

DOI: 10.1504/IJRM.2015.073834

International Journal of Revenue Management, 2015 Vol.8 No.3/4, pp.299 - 323

Received: 24 Jul 2015
Accepted: 16 Sep 2015

Published online: 23 Dec 2015 *

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